Stock futures dropped Friday morning as investors took a pause after a four-day rally and continued to await election results from key states.
Better-than-expected jobs data helped to curb losses, however. The Labor Department reported that the economy created 638,000 jobs last month, more than the 580,000 expected, while upwardly revising September’s data to 672,000. Friday’s jobs report also saw upward revisions to the last couple months’ worth of payrolls — a sign that soaring new COVID-19 infections aren’t yet preventing new jobs from being created.
Contracts on the Dow traded lower by more than 100 points, or 0.5%, after the index gained nearly 550 points, or 2%, on Thursday. Shares of Uber (UBER) dropped in early trading after the company reported that gross bookings for its unprofitable food delivery business outpaced those of its core ride-hailing unit for a second straight quarter. And shares of Peloton (PTON) slid after the company warned of rising supply chain costs and extended delivery delays, offsetting strong third-quarter sales and guidance for the current quarter.
The election remained the key focal point for Wall Street. As of Friday morning and three days after Election Day, several key states including Pennsylvania, Nevada, Georgia and North Carolina had yet to be called in favor of either candidate. Both candidates still have at least one path to victory depending on the outcome of the states still outstanding.
Vice President Joe Biden had 264 electoral votes and President Donald Trump had 214, according to the Associated Press’s tally as of Thursday evening. Candidates require 270 electoral votes to be named the winner of the election.
States called for Trump: Ky., W. Va., S.C., Ala., Miss., Tenn., Okla., Ark., Ind., N.D., S.D., Wyo., La., Neb. (4 of 5 electoral votes), Kan., Mo., Idaho, Utah, Ohio, Iowa, Mont., Fla., Texas
States called for Biden: Vt., Va., Conn., Del., Ill., Md., Mass., N.J., R.I., N.Y., N.M., D.C., Colo., N.H., Calif., Ore., Wash., Hawaii, Minn., Ariz., Maine (3 of 4 electoral votes), Wis., Mich.
A win for Biden has been viewed as increasingly likely, given the candidate would need to capture just one more of the outstanding battleground states to take the White House. He said in a press conference Thursday afternoon that he had “no doubt” that when the counting is completed, he and Senator Kamala Harris “will be declared the winners.”
Trump, however, doubled down on his calls to “stop the count,” after his campaign sued in several states to challenge the ballot counting process. A judge in Michigan denied Trump’s effort to suspend the voting tabulation process in that state on Thursday.
Despite some of the uncertainty still surrounding the election, stocks rallied strongly again. According to a number of analysts, traders ascribed more importance to the fact that a divided government was set to be the most likely outcome of the elections, in which no single party would control each of the White House, Senate and House of Representatives. Under that scenario, major policy changes would be unlikely to get advanced.
“This machine that is the market seems to have reacted fairly well to the situation that we’re currently in, and that seems to be this perception that we’ll have a divided Washington, which will mean probably no to low regulatory issues for the Big Tech firms, [and] the corporate tax issue will perhaps fall to the wayside,” Sylvia Jablonski, Direxion Managing Director, told Yahoo Finance.
“And perhaps there’s fiscal stimulus that comes in. Whether it’s a smaller number than we hoped for, it’ll probably still come,” she added.
8:30 a.m. ET Friday: Jobs data beat expectations; unemployment tumbles
The U.S. labor market continues to show resilience, as October nonfarm payrolls rise by a better-than-expected 638,000 during the month. Even more importantly, the unemployment rate tumbled to 6.9%, an encouraging sign that the economy continues to recover even as new COVID-19 infections soar to new heights.
Futures are pointing to a softer open after a breathtaking rally this week, but the downside is likely to be contained by the stronger jobs data.
7:20 a.m. ET Friday: Stocks point to a lower open after four straight days of gains
Here were the main moves in markets, as of 7:20 a.m. ET Friday:
S&P 500 futures (ES=F): 3,484.5, down 20.25 points or 0.58%
Dow futures (YM=F): 28,179.00, down 118 points or 0.42%
Nasdaq futures (NQ=F): 11,983.00, down 93.5 points or 0.77%
Crude (CL=F): -$1.18 (-3.04%) to $37.61 a barrel
Gold (GC=F): +$9.40 (+0.48%) to $1,956.20 per ounce
10-year Treasury (^TNX): -0.3 bps to yield 0.775%
6:19 p.m. ET Thursday: Stock futures flat after rally
Here were the main moves in markets, as of 6:19 p.m. ET Wednesday
S&P 500 futures (ES=F): 3,506.00, up 1.25 points or 0.04%
Dow futures (YM=F): 28,308.00, up 11 points or 0.04%
Nasdaq futures (NQ=F): 12,071.5, down 5 points or 0.04%